Daktronics free essay sample

Daktronics, a company specializing in manufacturing electronic score board systems, is facing the issue of dealing with a changing environment in their market. Having invested a large amount of capital into their large sales force, the company accrued â€Å"relationship capital†. However, increasing involvement of consultants in the market changed the market structure, their good will or relationship capital may not be enough to maintain their marketshare. The presence of the consulting firms coupled with poor market conditions and sometimes hostile relationships with the consultants eroded Daktronics profits. The company now must decide what they are to do as a result of the changing environment in the large venue sports industry and how they will adapt to working with consultants. Strengths Daktronic is a market leader in electronic scoreboards, programmable display systems, and large screen video displays. They have a 70-75 percent market share. Over 40 years in the business Being an engineering company, they are able to have competitive pricing They provide one-stop shopping, whereas competitors have to go through multiple companies whose interfaces don’t always work well with one another Product life cycle is about 10 years Daktronics is proactive about checking in with their clients, they have positive reviews on their customer service Miami University considers them the best value on the market when it comes to price, training, support systems and follow up Won the largest percentages of contracts with a contractor at 38% Has a legacy, and is already in a lot of great venues gives them an advantage because they already have a foot in the door Has a pretty big stronghold because they have relationships with so many of the ground level people, broadcast engineers and production teams are familiar with their product so when it’s time to replace the equipment their opinion is based on whatever vendor is currently in their facility Jay Parker, sales manager at Daktronics stated that they always considered a finalist for a job. Familiar with needs of customer base especially those on college campus and sports venues Daktronics is doing better than Mitsubishi (even though Mitsubishi’s product is a premium product with a longer life) because Mitsubishi’s displays put out much more heat, which require more energy Daktronics HD product is one of the best in the industry currently for an off-access viewing angel with a fairly tight pixel density Daktronics’ unique configuration of pixels allows for very wide viewing angles They are multinational company, they have an installed base in nearly 100 countries They usually win 70 percent of the sport facility projects Weaknesses Their major contracts involve many people making the decision, it’s a complex sale and they have to influence many people. Manufacturing is done in the US, from a price and competitive standpoint they are losing market share from companies manufacturing in Asia Daktronics’ unique configuration of pixels make s the display look less contiguous for people close to it Net sales dropped from $581 million in 2009 to $393 million in 2010 Opportunities Demand for complex media technology and applications in sporting facilities continued regardless of the economy Consultants do direct business towards Daktronics but force them to beat the price of their lowest competitor Daktronics try to get in at the early stages of the buying decision, build a relationship and then position themselves into a lead position Sometimes the consultants will help their suppliers and tell them to adjust their sales pitch and tell them about the client’s concerns Threats Relationships with consultants are sometimes confrontational, Jay Parker stated that they sometimes make the company look as bad as possible so that their client would select another supplier Appendix C list of digital signage competitors Overall market environment was uncertain and complex Sony, Mitsubishi and Barco are video companies in the large sports venue market that are competitors to Daktronics Consultants in the large sports venue market are now being included in the buy ing process taking revenue away from Daktronics sales people Sluggish economy limited the disposable income of the fans, teams and facilities that Daktronics drew revenue from Mitsubishi’s products are better than Daktronics and more of a premium product, they also have a track records of super-longevity, they have a better reputation, and once the product is installed you’ll never have to touch Competitors try to buy their way into the market by bidding for projects at half Daktronics’ price, increasing their competition and lowering their prices at the same time World of sports is contingent on the economy and whether sponsors will buy advertising or if fans will buy tickets Consultants require they break down their invoices to individual item pieces and components and take the lowest price for each item between competing companies Daktronics has a few options for dealing with the increasing involvement of consultants as intermediaries in the sale process in the large sports venue market . They can ignore the presence of consultants and continue with business as usual. They can try and work with the consultants, perhaps offer them benefits for their sales involving Daktronics products or educate the consultants more on their company’s products and services. This option might be difficult given their current confrontational relationship with some consultants. Lastly, they can try and train their sales staff to work and think more like consultants or â€Å"owner’s representative† and less like sales representatives. This last approach would require that they be more knowledgeable about their competitor’s products. Ignore the consultants and continue with what they are doing Pros: This option does not require any additional effort or capital on Daktronics part They already have the largest market share in the industry They would still win most of the consultant assisted bids Cons: Consultants may still have a confrontational relationship with Daktronics, ignoring the problem would allow them to continue to talk down on the company and their products. Profits can continue to erode if they don’t face the problem Try and work with consultants Pros: Working with the consultants could better their relationship with the consultants. Working with consultants may sway them to recommend their product to the buyers. Working with consultants may educate them on the company’s strengths which they may not have known before. They would probably need fewer sales representatives if they worked with consultants. Cons: Consultants still get a cut of the deal even if the buyer purchases Daktronics product. Trying to work with consultants gives the consultants more power to demand lower pricing and kickbacks Requires more effort on Daktronics part, but does not guarantee increase in sales Train sales staff to work more like consultants Pros: This approach puts the needs of the buyer first, by counselling the buyer this would better their relationship with them. If the sales force acted more like consultants, they may be able to control more of their sales and take business away from the consulting firms. This requires that the sales team be more knowledgeable of their competitors and their pricing Cons: Requires time, energy and capital to train their sales force Being more like the owners representative requires that they provide direction, counsel and active management for the coordination of the signs, sometimes it may be more beneficial for the buyer to go with another company and this would cause a conflict of interest. Acting more like consultants would require they be more transparent about their business, which is unfavorable when trying to make a sale. I think the most advantageous option for Daktronics would be to try and work with the consulting firms. The consulting firms already have the knowledge base of their competitors and have information on the needs of their clients, working with would give them access to information they might not already have. To do this they would need to mend their relationship with some of the consulting firms they are in conflict with and try to build â€Å"relationship capital† with the consultants. This would alternative is not guaranteed to work, but they have the least to lose by choosing this option.